NAO in dispute with Defra over IT-based Single Payment Scheme

A government department has taken the unusual step of refusing to sign off a report by the public spending watchdog the National Audit Office on an IT-based...

A government department has taken the unusual step of refusing to sign off a report by the public spending watchdog the National Audit Office on an IT-based project, Computer Weekly has learned.

Officials cannot remember any other time in the past 20 years that any central government department has refused to sign off an NAO report.

The Department for Environment, Food and Rural Affairs (Defra) has given no formal agreement to a report of the NAO on its value-for-money investigation of the Single Payment Scheme.

The scheme is administered by the Rural Payments Agency, which is part of Defra. It is supported by a £350m system, which was built largely by Accenture to pay about £1.6bn in subsidies to 116,000 farmers.

The NAO's report, which was published last week, said that Defra and the Rural Payments Agency had shown a "scant regard to protecting public money" and that the scheme cost £1,743 per claim, which is more than six times higher than the cost in Scotland where it is £285 per claim. Defra disputes the figures.

Urgent action

In the past, the NAO has held off publishing reports until a department or agency has given its sign-off - which has delayed the publication of NAO reports on the NPfIT, the NHS's National Programme for IT.

But Amyas Morse, who was appointed the head of the NAO in June, is signalling that he is not always prepared to delay reports to meet a department's objections.

His auditors believe that urgent action is needed to stop the Rural Payments Agency's IT systems overpaying farmers large amounts. The Agency later seeks to recover the overpayments, sometimes a long time later and without notice, and on occasions without success.

A hearing of the Public Accounts Committee is scheduled to take place on Monday 26 October, at which the civil service heads of Defra and the Rural Payments Agency are expected to defend the IT and the quality of the data in the system.

They are also expected to dispute the NAO's figures in what may become a heated hearing over what is, and is not, fact.

Clearance process

Such a deep-seated disagreement between a department and the NAO is rare, if unprecedented, since 1986 when the NAO agreed to have its reports "signed off" by departments.

The clearance process, as it is called, was aimed at stopping disputes over facts dominating hearings of the Public Accounts Committee when MPs meet to question civil servants over reports produced by the NAO.

Computer Weekly understands that departments and agencies sometimes disagree with certain facts, and make this clear in a letter to the NAO, but they still sign off the audit office's report.

This time Defra has not signed off the entire NAO report, "A second progress update on the administration of the Single Payment Scheme by the Rural Payments Agency". The NAO regards Defra and the Rural Payments Agency as "not cooperative enough".

Defra gave no reason for its refusal to sign off the NAO report. Nobody at Defra was available for comment.

MP Richard Bacon, a member of the Public Accounts Committee, said of the NAO's decision to publish its report on the Single Payment Scheme without the agreement of Defra: "I think it is a sign of Amyas Morse's new broom that he's not prepared to accept delaying tactics from departments."

The NAO's third report on the Single Payment Scheme was its most hard hitting.

Clear expectations

Phil Gibby, an NAO director, was asked at a press conference last week whether Defra and the Rural Payments Agency would heed the report's recommendations, given the NAO's uncertainty over whether decisive action had been taken after its previous recommendations.

"This is a much stronger report than we have produced before," he said. "We have made it very clear what we expect to be done."

But Gibby added that the NAO cannot force Defra or the Rural Payments Agency to act. The NAO has its "frustrations" over the lack of decisive action by the department.

An NAO spokesman emphasised the importance of the "clearance" process, which he said will continue. Clearance makes it less likely that the government will dismiss an NAO report as inaccurate.

NAO findings

These are some of the NAO's findings on the Single Payment Scheme:

"We consider the scheme's IT to be very expensive."

"Heavy customisation of the IT systems has resulted in very complex software which is expensive to modify and maintain, and has increased the risk of obsolescence. For example, any further upgrades in response to policy initiatives from the European Commission will be expensive to implement."

"Around a third of the changes made to the finance system have been 'invasive', requiring changes to the [Oracle] source code, although the Agency did not keep an accurate record of all the changes made."

"The degree of changes to the system has created other problems. The involvement of Agency staff in the original implementation of the system blurred responsibilities with its contractors, leading to a lack of clarity over who is liable if the system goes wrong."

"In view of the heavy customisation of systems since then, we have been unable to gain adequate assurance over what redress would be available for any potential system failures in future.

"Despite the changes that have taken place, scheme payments show little sign of increased accuracy, with estimated overpayments of £24.3m and underpayments of £38.8m in scheme year 2008."

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